The controversial example of hardwood plywood is a case in point: Without imports of these plywoods, the American flush door industry would not be able to meet its demand. And beyond this, some 3,100,000 people are now dependent on our export trade for their jobs, many times more than those whose jobs are involved in import competition. This is nowhere more true, of course, than in American agriculture.

Nevertheless, we cannot close our eyes to the effects of competition from abroad. As is the case of competition within the domestic economy, there are some producers, perhaps some nations, which enjoy a competitive advantage, even great enough to overcome the added costs of transportation to the United States. Indeed if this were not true, there would be no international trade except that arising from distribution of natural resources among the nations of the world. Competition from abroad, like domestic competition, not only sharpens the incentive and efficiency of American industry but in a free dynamic economy causes necessary and healthy redistribution and reallocation of resources including capital and manpower.

Under ordinary circumstances this requires no intervention by the Government. On the contrary, under ordinary circumstances it should be welcomed as a means of helping to keep the economy efficient and productive, and we should be extremely wary of the use of tariffs to prevent the necessary adjustments and perpetuate economic inefficiencies and anachronisms.

In saying this, however, we cannot fail to recognize that under exceptional circumstances the effects of this, however healthy for the economy as a whole, may be extremely harsh in its impact on certain small segments of American capital and American labor. Where these are diffused throughout the economy, offering the expectation of efficient reemployment in other forms of production, they can be absorbed after a brief period of adjustment, as happens in the aftermath of domestic competition.

It is merely when the effects are sudden, substantial, and concentrated geographically that they create a situation which we believe the Government is bound to take cognizance of.

ADA is by no means indifferent to this kind of situation. We have repeatedly recommended that the Trade Agreements Act should include provision for adjustment assistance to help both business and workers in tiding over the period of redeployment to other productive economic activity, just as we have supported similar programs for economic development of areas of the United States depressed for any other reason.

If, for example, there are areas where coal mines and coal miners are no longer fully employed, and where the prospect is that they will not be, it seems to us that it is of incidental importance whether the cause is from technological change, severe foreign competition, severe domestic competition, or the exhaustion of the coal. In any case, the country has an obligation to soften the impact of this on the people concerned. Always it is the people, not the activity or the product, which is the object of our concern.

For this reason we support the bill by Senator Kennedy, S. 2097, for a comprehensive adjustment assistance program as an integral accessory of the reciprocal trade program. In fact we would propose

that this procedure rather than the escape clause procedure should be invoked in cases of "serious injury" to domestic producers.

From the foregoing, Mr. Chairman, it will be plain to you that ADA would under any circumstances support a reciprocal trade program as being in the best interests of the American economy.

There are two compelling reasons of international policy which reinforce the importance of this program and which make it absolutely essential that the act be extended if not permanently for at least 5

years.

The first of these, of course, is the economic war declared on the free world, and on the United States in particular, by the Soviet Union.

The evidence is accumulating day by day, from Government and non-Government sources alike, that this is no idle threat.

The Soviet Union has certainly the intention to undermine the United States position in the world economy for the economic and political benefit of the Communist bloc.

We have, unfortunately, direct examples such as Egypt and Syria of how effective this can be and how much harm it can do to our standing and our cause. Moreover, there is evidence of the rapid growth of the Soviet economy which is giving them the means of carrying out this intent.

It seems clear to us that a Reciprocal Trade Agreements Act is an indispensable tool for the kind of flexible, dynamic, long-range United States trade policy needed to counter the Soviet offensive.

The other compelling reason for a long-range extension of the act is, of course, the prospect of the European Common Market which will come into being over the next few years. Specifically, the common external tariffs of the Common Market will be in the process of negotiation over the next five years and will reach a crucial stage at three years from now.

A trade agreement act that expired precisely at that time would have the effect of hobbling the negotiations by which the United States can hold its place as an exporter to the European market.

It is not only good international policy but stern self-interest which requires us to keep our best tool in full working order for these purposes. For this reason, also, while we would advocate a permanent authority, we feel that a 5-year extension is indispensable.

Mr. Chairman, we urge you to look at this as a question of the highest importance affecting the national and international policy of the United States.

As you listen sympathetically to those for whom increased imports create serious problem-and less sympathetically, we hope, to those seeking merely a windfall of protection-we urge you to decide the case in favor of the national interest. We hope you will decide to approve H. R. 12591, with an adjustment assistance program added, as the minimum that will serve that interest.

Senator LONG. Mr. Hollander, what is your view with regard to industries and commodities that are essential to national defense? Do you believe that we should continue to produce these commodities in quantities sufficient to supply our wartime needs?

Mr. HOLLANDER. Senator, I adverted to that on the second page of the testimony, saying that the national interest has sometimes

required, especially the national defense, or national security has sometimes required action at variance with this kind of trade program, and that we recognize particularly the necessity to keep if not production, then the facilities which will make possible production, though I must say I am bound to call your attention to the view that is more and more widely expressed, sir, most recently I believe by Professor Galbraith in his new book that if, God forbid, there should be another war, it will not be a long war of production and of the economy as the Second World War was, but that in a full-scale nuclear war, we would never have a chance to mobilize our productive facilities, so that it would seem that we would need to keep those facilities in condition for whatever emergency might arise.

Senator LONG. In the event of another war, we may have to fight the war with what we have on hand when it begins. That is one point I have made in connection with fuel oil and gas. It is not possible during a war to allocate the steel and the productive facilities to make the equipment with which to drill wells. You have to have enough fuel when the war begins to fight during its early phases. If you do not have enough oil to get that far, you have lost the war anyway.

Mr. HOLLANDER. Senator, it has seemed to me that there was a case to be made for conserving that oil for just such emergencies when we might be cut off from overseas supplies, and using the overseas supplies while we still could.

I am not sure what the advantages from the national defense might be of one course as against the other.

Senator LONG. For the last 20 or 30 years, the actual money reserves of oil have been enough to last the Nation for about 23 years. As those reserves have been depleted, discoveries have increased, and there is every reason to believe that there is as much oil between 10,000 feet and 20,000 feet as there is between the surface and 10,000. In other words, we have developed perhaps less than half of the known reserve, and there is a great reserve we have not found at 10,000 feet.

Much of that is high-cost oil as compared to oil produced in foreign countries.

Saudi Arabia has a very low production cost, even lower than that of Venezuela or Canada. If we put ourselves in the position that we rely upon that oil, however, we will not be developing our own reserves. The crucial point is that we cannot develop our reserves in just a few months. It would take a number of years. Even 5 years would not give you sufficient time to develop the reserves that you would need to fight a war, and, by that time, the war would be over.

I take it that you see the need of having an oil industry that can meet the Nation's requirements in the event of war?

Mr. HOLLANDER. Yes.

Senator LONG. How about the program of spreading? It seems to me that it would help consumers if we increase imports that spread the competitive effect. Would it seem fair to you to try to reduce tariffs in such a way that all industries in which foreign nations can produce as cheaply as the United States would bear their share of foreign competition?

Mr. HOLLANDER. Well, in a free market, Senator, as we hope we have in the United States, you have to leave this in the last analysis

to the consumers, both the individual consumers and the business consumers as to where their preference lies.

It may be that they greatly prefer American automobiles let us say, to foreign automobiles, but it may be that they prefer Swiss watches to American watches, and I do not know how in a free, dynamic economy like this you can order the kind of spreading that you speak of except through some governmental action which will cushion the effects on the people who are most directly affected if it affects them seriously. Senator LONG. I think that as long as an industry is exporting a lot more than it is importing, it has little need of additional tariff protection. I wondered if you felt that way.

Mr. HOLLANDER. Yes, indeed.

Senator LONG. Frankly, unless and until you can put into effect the sort of program that you are advocating, a program which has very little possibility of being enacted now and which provides relief for all the individuals and industries that we forced out of business, people are going to resist any increased trade that drives their industries out of business and their people out of work. I am sure you would agree that that would be the case.

It seems to me that the best way to expand foreign trade is to require that tariffs be reduced in industries where exports exceed imports. Would that seem fair to you?

Mr. HOLLANDER. Yes.

Senator LONG. There was a proposal 3 years ago that we suspend tariffs on articles that are imported into this Nation in negligible quantities.

How would you feel about that today?

Mr. HOLLANDER. Well, except if the tariffs are very high, it would not seem to me that this would very likely expand trade very much, because if they were much in demand in this country, they would not be imported except in negligible quantities.

Senator LONG. My guess is that at the time that statement was made automobiles were in that category.

Compared to the volume of the industry the imports of foreign automobiles 3 years ago were in negligible quantities.

Mr. HOLLANDER. Yes.

Senator LONG. But nowadays there are considerable imports.

In dollar volume, however, the imports still do not approach the exports of our automobile industry.

I have the impression that you would increase trade if you let other people compete in the American market and gain a certain acceptance for their product. If they were to gain a sizable portion of the market, however, the domestic industry would be entitled to more protection.

Mr. HOLLANDER. Well, there is another course that domestic industry can take, Mr. Chairman, and it seems to me that perhaps automobiles illustrates the point I was trying to make so briefly, and that is the reaction in a competitive economy to this kind of competition.

I think the automobile industry as far as I know has reacted not by asking higher tariffs but by asking itself should it not itself manufacture small cars of the kinds that are being imported, and this kind of competition I regard as healthy, and it may lead the automobile industry to a reevaluation of its products which on the whole is the

way competition is supposed to work, and I think this is all to the good.

Senator LONG. Senator Malone.

Senator MALONE. What is the Committee for Democratic Action? Mr. HOLLANDER. It is an organization for political action, Senator, consisting of something over 40,000 individuals throughout the country who are generally in favor of what we call a liberal political and economic domestic and foreign policy.

Senator MALONE. You operate in all the States of the Union?
Mr. HOLLANDER. Just about.

Senator MALONE. What States are left out?

Mr. HOLLANDER. I would not be able to answer that offhand without looking it up. I think we have members in every State.

Senator MALONE. Would you do that and give us a list of the States? Mr. HOLLANDER. Yes; of course.

Senator MALONE. If you would; and if you have a president or manager in each State I would be very glad if you would furnish it for the record. Would you do that?

Mr. HOLLANDER. We do not have chapters in every State, Senator. In some States we have what we call members at large.

Senator MALONE. Where you do have a chapter there is a manager? Mr. HOLLANDER. Or an officer; yes, indeed.

Senator MALONE. Furnish us that, if you will.

Mr. HOLLANDER. Yes, indeed.

Senator MALONE. And you say for political action. How do you go about this political action?

Mr. HOLLANDER. Well, political action in the broadest sense, Senator. This is an organization of people who believe that by engaging in political action at home, through elections and through trying to influence legislation, it can bring about the accomplishment of the objectives that they believe in.

Senator MALONE. And your objectives; do they include foreign aid, the billions to help Europe and Asia?

Mr. HOLLANDER. Yes, indeed, Senator.

Senator MALONE. They include free trade, that is the 1934 Trade Agreement Act which has been extended 10 times.

Mr. HOLLANDER. Yes.

Senator MALONE. Does it embrace continued inflation that we have had?

Mr. HOLLANDER. No, indeed.

Senator MALONE. Do you think that is a good thing?

Mr. HOLLANDER. No, indeed.

Senator MALONE. Apparently no administration has tried to slow it up very much. It started when we went off the gold standard and began to print money without anything behind it, and then by raising the debt limit continually. I suppose there are many factors, but as long as Congress continues to raise the debt limit, and as long as the Federal Reserve Board which Mr. Martin heads can, as he recently testified, put more money in circulation or take some out of circulation through various manipulations, as long as they can fix the stock-market margin from 100 percent to no margin if they want to, they can just about control the economy. Don't they do that here in Washington?

Mr. HOLLANDER. No; I would not say so, sir.